Philip Hammond’s upbeat economic health check

LONDON — U.K. Chancellor Philip Hammond said he was "positively Tigger-like" as he unveiled a spring statement that upgraded growth projections and predicted falling inflation and borrowing.

However, business groups warned that Brexit means tough times ahead and the government should use the surpluses of today to minimize the pain to come.

In his statement to parliament — one of two annual updates on the health of the economy that the chancellor gives to the House of Commons — Hammond said the U.K. economy had reached a turning point. He added that there was "light at the end of the tunnel" after the Office for Budget Responsibility (OBR) — the U.K.’s independent budget forecaster — revised up its growth and productivity figures, as well as unveiled lower expectations for public debt.

While Hammond accused the opposition Labour Party of being “Eeyores” for their grim economic outlook, he refrained from making any major announcements.

“I do not agree with those who argue that every available penny must be used to reduce the deficit, nor do I agree with the fiscal fantasists opposite who argue every available penny should be spent immediately. We will continue to deliver a balanced approach balancing debt reduction against the need for investment,” Hammond said.

The OBR forecast the budget deficit to hit £45.2 billion this year, £4.7 billion less than forecast in November. Borrowing is forecast to fall from 2018 onward, with the deficit dropping below 2 percent of GDP next year, and below 1 percent of GDP by 2022.

Shadow Chancellor John McDonnell strongly criticized Hammond for missing an opportunity to reverse public spending cuts.

“Today’s statement could have been a genuine turning point but it is — depressingly — another missed opportunity. People know that austerity was a political choice, not an economic necessity,” McDonnell said.

Hammond highlighted the improved economic figures coming from the OBR, showing GDP growth at 1.7 percent in 2017, compared to the forecast 1.5 percent, and an unexpected boost in productivity growth. Productivity, measured as output per worker, was 0.2 percentage points stronger than expected in the second half of 2017.

“Possibly we may just be at the beginning of a turn on the trajectory of productivity performance in this economy,” Hammond said.

However, the OBR highlighted the downside risk to the forecast caused by Brexit, and business groups downplayed the improvements and called on the government to target investment toward boosting productivity in light of Brexit.

“The OBR continued to be downbeat on productivity growth, with recent increases largely driven by a fall in hours worked, rather than a pick-up in output. As such, the government must continue to push forward with its proposals in November’s Industrial Strategy and make clearer to businesses how it will bolster skills, infrastructure, and innovation,” said Tej Parikh, senior economist at the Institute of Directors.

More broadly, the government needs to avoid the temptation to use the surplus to make politically attractive short-term spending priorities and focus on getting ready for Brexit challenges, said Adam Marshall, director general of the British Chambers of Commerce.

“Any headroom the chancellor has must be used to leave a lasting mark on the U.K.’s infrastructure and to attract investment — particularly with the challenges and changes of Brexit ahead,” he said.

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Jack Boot

It is time these people in the EU realised that the World does NOT owe them a living.

Posted on 3/13/18 | 6:45 PM CET

lib crit

welcome to brexitland…. record homelessness and personal bankruptcies in the UK… real income the lowest in the past 10 years…..

Posted on 3/13/18 | 7:04 PM CET

Craig Lamont

@ Lib crit, perhaps it could be looked at as a reset point, the point where people woke up to the seriousness of personal debt (and easily obtained credit) which is used by elites to keep the masses in servitude. Maybe people are now thinking hard about having the latest smartphone or big TV etc and instead prioritising how they spend their money? Maybe, just maybe it is occasionally a case of being cruel to be kind?

Posted on 3/13/18 | 8:24 PM CET

That's right

It is time that POLITICO moderates the comment sections and ban the trolls like Jack Boot aka wow

Posted on 3/14/18 | 3:40 AM CET

Priscilla du Bleu

@Jack Boot
“It is time these people in the EU realised that the World does NOT owe them a living.”

Booty, slowly you appear as maniacal as the user ‘wow’ :-D.

Where and when did the EU state that the world owns them a living?

Posted on 3/14/18 | 7:24 AM CET

Anthony Chambers

@That’s right: Don’t worry, post Brexit you can have your one sided debate related EU federalism being full introduced in 2025 vs. 2026. Single party rule for the next 50 years under the EPP should be fun for you.

Until then you have to put up with people having a different view to you.

Posted on 3/14/18 | 7:42 AM CET

Priscilla du Bleu

@That’s right
“@Jack Boot, Anthony Chambers

These 2 trolls are trying their best to lower as much as possible the quality of the discussion. One is clearly a troll (former wow) the other is either a troll or extremely in difficulty when it comes to rational thinking.”

Dear friend, in general i highly welcome and am grateful for the moderating efforts by politico, since the quality of discussions has improved significantly the last couple of days. Usernick abuse – at least for my usernick – has stopped.

Before this long needed measure kicked in, the user tpk and lil not so ole me set up as backup / alternative for discussing a blog which we can activate within minutes, should things still remain being trollhaunted or go to even more troll infestation here.

You are highly welcome like any other non-trolling commenter to join. I agree that the maniacal posting habits of the former user ‘wow’ is being successfully copied by the user ‘Jack Boot’ :-D.

Posted on 3/14/18 | 8:07 AM CET

Priscilla du Bleu

@lib crit
“welcome to brexitland…. record homelessness and personal bankruptcies in the UK… real income the lowest in the past 10 years…..”#

But …. but …. but … but …. blue passports, cake-shi**ting flying unicorns for everyone in sunny uplands, back to domestic nutrition = fish & chips, taters and cabbage, and the empire 2.0 re-instated …. well worth ruining a country for an entire generation until the EU accepts the UK’s re-application.

Posted on 3/14/18 | 8:15 AM CET

-> tpk

Could it be that for people like Jack Boot and others it is more about winning arguments than about being right? Could it be that this is kind of an English sport? Well, it’s an international sport of course, but perhaps a bit stronger in UK than elsewhere?

Posted on 3/14/18 | 8:21 AM CET

Jack Boot

@-> tpk
“more about winning arguments than about being right?”

Your reasoning skills are as useless as your arguement. 🙂

It is time these people in the EU realised that the World does NOT owe them a living.

Posted on 3/14/18 | 8:36 AM CET

Anthony Chambers

@tpk: I am glad you admit we win some discussions. From where I am sitting it does not seem that way. If I had won something you might have come to see the world a little bit differently. But you all seem to be locked in one way of thinking.

For example, none of you seem to accept the fact that it is a logistical and practical impossibility to create a hard border on the island of ireland, yet you suggest that the EU will have to do that, because of the man made rules of the EU. Then you suggest that is the UK’s fault. There is and has never been any WTO rule that says you have to have a fence and armed guards to collect tariffs at the border.

You all also seem to think that the choice of a customs union is some simple thing that the UK government could just do and it would have no repercusion. I tell you this clearly it would be political dynamite. It would bring down the government. You might if you were lucky get corbin. He is more anti-EU than farage. He has publicly stated that he could never accept a customs union or single market if it entailed keeping state aid rules and the ability to control migration. Again, 2 massive red line for the EU.

There is no route out of this involving the UK or NI being in the customs union and single market. And as soon as people realise that, we can start to find practice methods of ensuring that the EU gets all the tariffs thay are due and no products incompatible with the EU market get in through the border. We can use many different effective measures together (just as we do together with the Irish state on excise duties). What we cannot do is put massive fences up and introduce border guards. We need to cooperate.

Posted on 3/14/18 | 8:39 AM CET

Jack Boot

@That’s right aka AH.“It is time that POLITICO moderates the comment sections and ban the trolls like Jack Boot”

Jack Boot

@That’s right aka AH.“It is time that POLITICO moderates the comment sections and ban the trolls like Jack Boot”

Someone will always speak out against oppression. 🙂

It is time these people in the EU realised that the World does NOT owe them a living.

Posted on 3/14/18 | 9:16 AM CET

-> tpk

@Anthony Chambers

As EU has never said what it would do in case there was no agreement I can only guess what they would do. When I say border I am thinking of a normal customs border we used to have in EU. No fences, no armed guards, just something like a toll collection in USA.

My whole point is that is impossible to leave the border uncontrolled in case of FTA or WTO. Due to tariffs and regulations. And my other point is, as you seem to agree now, that UK NEEDS EU as a partner here to achieve a solution.

Perhaps we can even agree that UK can not go WTO if it does not want to set up a border in NI?

Now this puts you in the hand and in the mercy of EU. If you want a Brexit worth being called Brexit you need the help of EU. Which is quite ironic.

I am trying not to be biased here, this is just about logic and technical possibilities. If I am missing a point I am glad if you correct me.

If we agree on the basic facts we could start and look for possibilities how to solve this. And honestly in the moment I don’t see much wiggle room for UK for a real Brexit, as EU will only offer either FTA (with Ireland aligned) or EEA.

Posted on 3/14/18 | 9:48 AM CET

Priscilla du Bleu

@Anthony Chambers
“Until then you have to put up with people having a different view to you.”

Not necessarily :-D. Some users appear to gave gone for good thanks to politico’s new moderation efforts.

Posted on 3/14/18 | 10:13 AM CET

Jack Boot

@-> tpk

The UK is at no ones mercy, the UK can simply say “NO” and ignore you.
Then what will you do ?

Posted on 3/14/18 | 10:14 AM CET

Priscilla du Bleu

@tpk
“Could it be that for people like Jack Boot and others it is more about winning arguments than about being right?”

Show me ONE case where the user booty has won an argument ……

Posted on 3/14/18 | 10:14 AM CET

Priscilla du Bleu

@Jack Boot
“@-> tpk

The UK is at no ones mercy, the UK can simply say “NO” and ignore you.
Then what will you do ?”

The EU will continue to do the same it did since the referendum: be the first one to tell the UK a strong and stable NO :-D.

Otherwise, keep laughing about the brekkie stupidity / laughing stock that the UK becomes wit brexit and enjoy all the future earnings from the UK’s brexoded industry.

Posted on 3/14/18 | 10:18 AM CET

Priscilla du Bleu

,@Jack Booty, the slow uptaker 😀
“It is time these people in the EU realised that the World does NOT owe them a living.”

When and where did the EU ever state that the world owes them a living? Other than in your little mind, that is?

-> tpk

@Jack Boot

You can leave the border open. That in effect means zero tariffs for EU. And therefore, due to favoured nation tariff, you have to offer zero tariffs for the whole world. You could do that, but that would be a rough economic choice. And you could forget about new FTAs, for who would offer you an FTA if he already had all access he ever wanted?

The same is valid for EU. So EU would for sure put up a border. So if you would not, that would not save Ireland from getting a border.

If you don’t believe me just google “wto can uk have no border”. Again, this is just about the logic possibilities I see. I don’t want to convince you that Remain is much better.

Posted on 3/14/18 | 11:22 AM CET

Jack Boot

@-> tpk
“You can leave the border open. That in effect means zero tariffs for EU. And therefore, due to favoured nation tariff, you have to offer zero tariffs for the whole world. ”

You are assuming that UK and EU will be trading under WTO (MFN) terms. How many times must I tell you that there will be a “fair and balanced trade deal including finacial services” before the message sinks in ?

Posted on 3/14/18 | 11:44 AM CET

Tony Brown

“Shadow Chancellor John McDonnell strongly criticized Hammond for missing an opportunity to reverse public spending cuts.”

Why the need to include a comment by the ridiculous McDonnell, a man so financially illiterate that he was even fired by ‘Red’ Ken Livingstone as the GLC head of finance for his incompetent and illegal budgets.

Posted on 3/14/18 | 12:50 PM CET

Priscilla du Bleu

@The booty ….
“How many times must I tell you that there will be a “fair and balanced trade deal including finacial services” before the message sinks in ?”

How many times must the EU27 tell you ‘NON’ before THIS message sinks in?

You are not in a position to ‘tell’ – your position is the one of a beggar, not a chooser.

Posted on 3/15/18 | 8:40 AM CET

Jack Boot

Since the EU wants a deal and the UK wants a deal, I reckon a deal is pretty much inevitable. We will all have to wait for he details but that deal will be a fair and balanced deal that includes financial services. That much is now guaranteed.
Now, since you cannot change BREXIT and you have no influence over the EU. And you’re so sure that all will be fine for and the EU and that only puny little Britain will suffer, then what concern is any of this to you? What are you doing here?
There are real Brits who do not like BREXIT and there are Brits who do like BREXIT. Anyone else, regardless of whether they are resident in the UK or not, who cannot offer anything constructive (as you), is only here to cause offense. And despite your claims, you are a German from Munich and you do not have any dual-nationality.

The World does not owe you a living and the EU is running out of other peoples money

Posted on 3/15/18 | 10:24 AM CET

Jack Boot

I don’t know what you mean, can you provide more clarity please ?

Posted on 3/15/18 | 11:45 PM CET

Priscilla du Bleu

@Jack the booty
” And despite your claims, you are a German from Munich and you do not have any dual-nationality.”

Desperate little brekkie :-D. First, i was born in London and lived in Gruenwald during my childhood, that much for your incorrect claims.

And then, dearest booty, it simply does not matter what you believe or not, it simply does not matter. What you want to be the reality and what reality is …… 2 different things. Live with it, you have no influence, no power, no choice – unlike me, no …. insert term. The only thing you have is delusion and a ‘mental challenge’. You can repeat your claims until the cows come home …. does not change a thing. 😀